SRDJAN KOVACEVIC Executive Director of EPCG

EPCG is seeking to increase the capacity of Montenegro’s hydropower potential while paving the way towards a seamless privatization of the energy sector.

Recent years have seen considerable changes in Montenegro’s power sector as it prepares for the creation of a regional energy market under the Athens Process. State-owned electricity company EPCG is one of Montenegro’s biggest and most significant enterprises. Responsible for the nation’s electrical power, and with 3,450 employees, it is also the country’s largest employer. As part of internal cost optimization, the company unbundled its production, transmission, distribution and supply branches so they now act as independent units, ready for a new era of open competition.

Although Montenegro imports around one third of its annual electricity requirement, only 17 percent of its hydropower potential is currently exploited. Consequently, EPCG is looking to develop the country’s full capacity. In March it entered a memorandum of understanding with Norwegian firm Statkraft. “The signing of the agreement is very positive not only for EPCG but also for the whole Montenegrin power industry,” said Srdjan Kovacevic, CEO of EPCG. “It demonstrates there is a large potential for increased hydropower generation here.”

Aluminum company KAP consumes 44 percent of the electrical energy in Montenegro. Recent privatization is expected to raise power prices by around 53 percent and entails that EPCG will have to supply two thirds of its energy by 2010. The government also plans to sell 67 percent of its shares in EPCG. According to Mr. Kovacevic, both government and management are against a fast privatization due to the company’s huge social and economic importance, preferring instead to increase its value and sell later at a higher price.